Reliance Defence’s CDR exit, refinancing plans get okay

Reliance Defence and Engineering, a subsidiary of Reliance Infrastructure, has secured an approval from a consortium of lenders led by IDBI to exit its corporate debt restructuring (CDR) package. The lenders have also given their go-ahead to implement the refinancing scheme of the company.

The proposals were presented to CDR Empowered Group’s meeting on 29 March and were approved by the requisite majority of CDR lenders. The Reserve Bank of India has also approved the exit plan.

IDBI has confirmed to the Ministry of Defence the approval granted to Reliance Defence’s CDR exit plan and the refinancing scheme — making the company eligible to participate in all future contracts of the Indian Navy.

Reliance Defence and Larsen & Toubro are the only private sector shipyards which will now compete with the government-owned ones for prestigious contracts to make submarines, landing platform dock and corvette.

According to the refinancing scheme, about ~6,800 crore of Reliance Defence’s debt will be refinanced with maturity of about 20 years and lower interest rate.

Exiting CDR will provide an increased financial flexibility to the company, besides more business opportunities.

Reliance Infrastructure has raised its shareholding in Reliance Defence to nearly 31 per cent.

The shipbuilder’s current order stands at over ~5,300 crore from the Navy, Coast Guard and commercial vessels. In March 2015, Reliance Infrastructure had acquired Pipavav Defence and Offshore Engineering Co, later renamed as Reliance Defence and Engineering. After acquiring Pipavav, the Reliance Group had announced its plans to exit CDR.

Reliance Defence’s scrip on Thursday stood at ~66.05, a rise of rose 3.36 per cent on the Bombay Stock Exchange.